BOX INC [BOX] Filings

10-Q 1 box-20211031.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-36805

Box, Inc.

(Exact name of registrant as specified in its charter)

Delaware

20-2714444

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

900 Jefferson Ave.

Redwood City, California 94063

(Address of principal executive offices and Zip Code)

(877) 729-4269

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share	BOX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Small reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 30, 2021, the number of shares of the registrant’s Class A common stock outstanding was 148,299,517.

TABLE OF CONTENTS


	PART I – FINANCIAL INFORMATION	Page
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets as of October 31, 2021 and January 31, 2021	5
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended October 31, 2021 and 2020	6
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended October 31, 2021 and 2020	7
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' (Deficit) Equity for the Three and Nine Months Ended October 31, 2021 and 2020	8
	Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended October 31, 2021 and 2020	10
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	40
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63
Item 6.	Exhibits	63
	Signatures	65

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:



our future financial and operating results; including expectations regarding revenues, deferred revenue, billings, remaining performance obligations, gross margins, operating income, and net retention rate;



our ability to maintain an adequate rate of revenue and billings growth and our expectations regarding such growth;



our market opportunity, business plan and ability to effectively manage our growth;



our ability to achieve profitability and expand or maintain positive cash flow;



our ability to achieve our long-term margin objectives;



our ability to grow our remaining performance obligations;



our expectations regarding our revenue mix;



our ability to maintain, protect and enhance our brand and intellectual property;



costs associated with defending intellectual property infringement and other claims and the frequency of such claims;



our ability to attract and retain end-customers;



our ability to further penetrate our existing customer base;



our ability to displace existing products in established markets;



our ability to expand our leadership position as a cloud content management platform;



our ability to timely and effectively scale and adapt our existing technology;



our ability to innovate new products and features and bring them to market in a timely manner and the expected benefits to customers and potential customers of our products;



our investment strategy, including our plans to further invest in our business, including investment in research and development, sales and marketing, our data center infrastructure and our professional services organization, and our ability to effectively manage such investments;



our ability to expand internationally;



expectations about competition and its effect in our market and our ability to compete;



the effects of seasonal trends on our operating results;



use of non-GAAP financial measures;



our belief regarding the sufficiency of our cash, cash equivalents and credit facilities to meet our working capital and capital expenditure needs for at least the next 12 months;



our expectations concerning relationships with third parties;



our ability to attract and retain qualified employees and key personnel;



our ability to realize the anticipated benefits of our partnerships with third parties;



the effects of new laws, policies, taxes and regulations on our business;



management’s plans, beliefs and objectives, including the importance of our brand and culture on our business;



acquisitions of or investments in complementary companies, products, services or technologies and our ability to successfully integrate such companies or assets, including the development of Box Sign;



the KKR-led investment in Box and achievement of its potential benefits;



any potential repurchase of our Class A common stock;



the potential impact of shareholder activism on Box’s business and operations; and



the impact of public health epidemics or pandemics, such as the COVID-19 pandemic, and governmental responses thereto.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations, except as required by law.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the SEC as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

BOX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)


	October 31,			January 31,
	2021			2021
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	568,265		$	595,082
Short-term investments		140,000			—
Accounts receivable, net		154,624			228,309
Prepaid expenses and other current assets		64,730			55,895
Total current assets		927,619			879,286
Property and equipment, net		117,397			160,148
Operating lease right-of-use assets, net		168,840			194,253
Goodwill		75,860			18,740
Other long-term assets		115,361			99,255
Total assets	$	1,405,077		$	1,351,682
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable, accrued expenses and other current liabilities	$	54,608		$	32,128
Accrued compensation and benefits		33,606			39,123
Finance lease liabilities		43,794			49,888
Operating lease liabilities		42,269			47,771
Deferred revenue		413,511			443,929
Total current liabilities		587,788			612,839
Debt, net, non-current		366,993			297,614
Finance lease liabilities, non-current		29,420			60,351
Operating lease liabilities, non-current		168,242			192,531
Deferred revenue, non-current		16,153			21,684
Other long-term liabilities		16,465			15,598
Total liabilities		1,185,061			1,200,617
Commitments and contingencies (Note 8)
Series A convertible preferred stock, par value of $0.0001 per share; 500 shares (unaudited) authorized, issued and outstanding as of October 31, 2021		493,166			—
Stockholders’ (deficit) equity:
Class A common stock, par value $0.0001 per share; 1,000,000 shares authorized; 149,010 shares (unaudited) and 159,851 shares issued and outstanding as of October 31 and January 31, 2021, respectively		15			16
Additional paid-in capital		1,089,180			1,474,843
Treasury stock		(1,177	)		(1,177	)
Accumulated other comprehensive loss		(2,914	)		(938	)
Accumulated deficit		(1,358,254	)		(1,321,679	)
Total stockholders’ (deficit) equity		(273,150	)		151,065
Total liabilities, convertible preferred stock and stockholders’ (deficit) equity	$	1,405,077		$	1,351,682

See notes to condensed consolidated financial statements.

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended						Nine Months Ended
	October 31,						October 31,
	2021			2020			2021			2020
Revenue	$	224,044		$	196,003		$	640,971		$	571,857
Cost of revenue		63,069			56,812			184,804			166,141
Gross profit		160,975			139,191			456,167			405,716
Operating expenses:
Research and development		55,837			49,454			159,418			152,683
Sales and marketing		76,368			67,112			218,967			207,619
General and administrative		39,857			25,239			105,242			79,778
Total operating expenses		172,062			141,805			483,627			440,080
Loss from operations		(11,087	)		(2,614	)		(27,460	)		(34,364	)
Interest and other expense, net		(2,336	)		(2,319	)		(8,275	)		(3,235	)
Loss before provision for income taxes		(13,423	)		(4,933	)		(35,735	)		(37,599	)
Provision for income taxes		438			351			1,399			891
Net loss		(13,861	)		(5,284	)		(37,134	)		(38,490	)
Dividend on series A convertible preferred stock		(3,775	)		—			(7,104	)		—
Accretion of series A convertible preferred stock		(526	)		—			(982	)		—
Net loss attributable to common stockholders	$	(18,162	)	$	(5,284	)	$	(45,220	)	$	(38,490	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.12	)	$	(0.03	)	$	(0.29	)	$	(0.25	)
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted		151,426			157,465			158,068			154,734

See notes to condensed consolidated financial statements.

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)


	Three Months Ended						Nine Months Ended
	October 31,						October 31,
	2021			2020			2021			2020
Net loss	$	(13,861	)	$	(5,284	)	$	(37,134	)	$	(38,490	)
Other comprehensive (loss) income*:
Changes in foreign currency translation adjustment		(1,754	)		(37	)		(2,730	)		135
Changes in unrealized loss on cash flow hedge		452			115			754			(1,125	)
Other comprehensive (loss) income		(1,302	)		78			(1,976	)		(990	)
Comprehensive loss	$	(15,163	)	$	(5,206	)	$	(39,110	)	$	(39,480	)

* Tax effect was not material

See notes to condensed consolidated financial statements.

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY

(In thousands)

(Unaudited)


	Three Months Ended October 31, 2021
	Series A Convertible Preferred Stock					Class A Common Stock						Additional Paid-In			Treasury			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount			Shares			Amount			Capital			Stock			Loss			Deficit			(Deficit)
Balance as of July 31, 2021		500	$	488,894			152,660		$	15		$	1,194,180		$	(1,177	)	$	(1,612	)	$	(1,344,393	)	$	(152,987	)
Issuance of common stock under employee equity plans, net of shares withheld for employee payroll taxes		—		—			2,057			1			(3,148	)		—			—			—			(3,147	)
Stock-based compensation related to stock awards		—		—			—			—			40,827			—			—			—			40,827
Series A convertible preferred stock, net of issuance costs		—		(29	)		—			—			—			—			—			—			—
Dividend on series A convertible preferred stock		—		3,775			—			—			(3,775	)		—			—			—			(3,775	)
Accretion of series A convertible preferred stock		—		526			—			—			(526	)		—			—			—			(526	)
Repurchases of common stock		—		—			(5,707	)		(1	)		(138,378	)		—			—			—			(138,379	)
Other comprehensive loss		—		—			—			—			—			—			(1,302	)		—			(1,302	)
Net loss		—		—			—			—			—			—			—			(13,861	)		(13,861	)
Balance as of October 31, 2021		500	$	493,166			149,010		$	15		$	1,089,180		$	(1,177	)	$	(2,914	)	$	(1,358,254	)	$	(273,150	)

	Three Months Ended October 31, 2020
	Series A Convertible Preferred Stock					Class A Common Stock						Additional Paid-In			Treasury			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount			Shares			Amount			Capital			Stock			Loss			Deficit			Equity
Balance as of July 31, 2020		—	$	—			156,399		$	16		$	1,373,580		$	(1,177	)	$	(1,375	)	$	(1,311,452	)	$	59,592
Issuance of common stock under employee equity plans, net of shares withheld for employee payroll taxes		—		—			2,244			—			(2,726	)		—			—			—			(2,726	)
Stock-based compensation related to stock awards		—		—			—			—			35,902			—			—			—			35,902
Other comprehensive income		—		—			—			—			—			—			78			—			78
Net loss		—		—			—			—			—			—			—			(5,284	)		(5,284	)
Balance as of October 31, 2020		—	$	—			158,643		$	16		$	1,406,756		$	(1,177	)	$	(1,297	)	$	(1,316,736	)	$	87,562

See notes to condensed consolidated financial statements.

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY

(In thousands)

(Unaudited)


	Nine Months Ended October 31, 2021
	Series A Convertible Preferred Stock				Class A Common Stock				Additional Paid-In			Treasury			Accumulated Other Comprehensive			Accumulated			Total Stockholders' Equity
	Shares		Amount		Shares		Amount		Capital			Stock			Loss			Deficit			(Deficit)
Balance as of January 31, 2021		—	$	—		159,851	$	16	$	1,474,843		$	(1,177	)	$	(938	)	$	(1,321,679	)	$	151,065
Cumulative adjustment due to adoption of ASU 2020-06		—		—		—		—		(68,576	)		—			—			559			(68,017	)
Stock consideration in connection with fiscal 2022 acquisition		—		—		—		—		10,000			—			—			—			10,000
Issuance of common stock under employee equity plans, net of shares withheld for employee payroll taxes		—		—		6,246		1		(19,937	)		—			—			—			(19,936	)
Stock-based compensation related to stock awards		—		—		—		—		129,316			—			—

BOX INC [BOX] Filings
10-Q	[2021-12-03]
10-Q	[2021-09-03]
10-Q	[2021-06-04]
10-K	[2021-03-19]
10-Q	[2020-12-07]
10-Q	[2020-09-04]
10-Q	[2020-06-04]
10-K	[2020-03-19]
10-Q	[2019-12-06]
10-Q	[2019-09-06]
10-Q	[2019-06-06]
10-K	[2019-03-20]
10-Q	[2018-12-06]
10-Q	[2018-09-07]
10-Q	[2018-06-08]
10-K	[2018-03-22]
10-Q	[2017-12-08]
10-Q	[2017-09-08]
10-Q	[2017-06-09]
10-K	[2017-03-24]
10-Q	[2016-12-08]
10-Q	[2016-09-07]
10-Q	[2016-06-09]
10-K	[2016-03-30]
10-Q	[2015-12-14]
10-Q	[2015-09-11]
10-Q	[2015-06-12]
10-K	[2015-03-30]
S-1	[2014-03-24]